A man manages to retire in Portugal after falling in love with the place on a vacation stay and turns the Portuguese beaches into his perennial paradise after going through many bureaucratic obstacles. “Moving to another country is like moving from home, but much more extreme; in addition, there is the issue of retirement,” declares this pensioner.
Ken MacKenzie, 64, had a holiday home in Praia d’El Rey (Portugal), where he had always loved to spend a lot of time. So, after retiring in 2021, he set out to convince his wife Diane to go live on the peninsula permanently. By then his partner had already bought a piece of land north of Lisbon in 2007.
You may be interested
Several retirees with more than 40 years of contributions explode against Social Security: “It is shameful; please stop making fun of penalized pensioners”
Lola Meño, forced to retire early at age 59: “with 47 years of working, I have lost 24% of my pension”
Although they had to overcome different adversities to launch their project, due to the financial crisis, in 2011 they already had a five-bedroom villa, with a pool and sea views.
During school holidays, the couple used to spend long periods with their four children there. MacKenzie returned to London on Monday mornings to work as a partner in an accounting firm and joined his family on Thursday evenings.
“I always had the idea that we could live here in the future, but you have to recognize that things are going to be different,” says MacKenzie. “You give up your routine and your daily contact with friends and family.”
Finally, in March 2024, the family took the step of converting their vacation home into their habitual residence. One more case of an English-speaking couple who decides to retire in the Iberian Peninsula.
How to retire in Portugal
Portugal has long been one of the favorite destinations for Britons looking for a quieter life. The climate is much better, the cost of living lower and, until recently, getting residency was relatively easy. In addition, there were very attractive tax advantages. It is estimated that around 50,000 British expatriates currently live there.
To move, the first thing is to apply for a residence visa and, once in the country, process the corresponding permit. According to Gilda Pereira, from the migration agency Heythis permit usually lasts two years and can be renewed for three more. After five years of legally residing, you can apply for permanent residence or even citizenship, as long as you prove you have sufficient income and housing.
Since Brexit, citizens of the United Kingdom can opt for the so-called golden visa, designed for those who invest or buy properties in the country, although it does not require living there all year round.
Pereira explains that the D7 visa is the most common option among British retirees. It is available to non-EU citizens who can demonstrate stable financial means: €870 per month for an individual or €1,305 for a couple. The good thing is that it does not require investing money in the country.
There used to be the Non-Habitual Resident (NHR) tax scheme, which offered significant benefits, such as a reduced 10% tax on UK pensions. That program ended in 2024, although those who were already enrolled can continue to benefit for ten years.
The MacKenzies moved in just in time. “It’s attractive that there’s a tax advantage, but we would have moved here anyway,” MacKenzie says.
The NHR was replaced by the IFICI system, which no longer offers tax advantages on pensions. Even so, Portugal still has advantages: there is no inheritance tax. Instead, a flat 10% rate applies to inherited assets, although immediate family members (such as a spouse, children or parents) are exempt.
Furthermore, thanks to a double taxation agreement between the United Kingdom and Portugal, taxes are not paid twice on the same income. Of course, it is advisable to collect the tax-free British pension before establishing tax residence in Portugal, since there is no similar exemption there.
Health and quality of life
Every person registered in Portugal can access the national health system. Unlike the British NHS, it is not free, but the prices are quite low: about 5 euros per consultation and 15 euros for emergencies.
“Many people choose Portugal for its climate, the friendliness of its inhabitants and its healthy lifestyle,” explains Pereira. “However, bureaucracy can be problematic for them. Applying for visas and permits can be complicated, so it is a good idea to look for a professional who can help with the process.”
MacKenzie adds: “Moving countries is like moving house, but much more drastic. And if you’re also retiring at the same time, you have to change your mindset from saving to spending. It can be a huge challenge.”
“I love sitting on the terrace and watching the waves”
For MacKenzie, retiring in Portugal has been just what he dreamed of. He swims every day, uses the sauna, plays golf, walks his dog Gizmo, rides his bike and goes to the gym. The beach is only 250 meters away.
“The weather is much better than in the UK and you can really enjoy the outdoors. I love sitting on the terrace watching the waves; the surroundings are spectacular. It’s like living in a five-star hotel,” he says.
“Having the vacation home has made everything easier. I think moving would be very difficult if we hadn’t spent time here before.”
Finances, pension and advice for those thinking of moving
MacKenzie and his wife first moved to a smaller house in Tunbridge Wells, UK, before taking the plunge. Now they rent it to have a fixed income, in addition to what they get from their investments and their private pension.
In a few years, the couple will start receiving the full state pension. Portugal remains one of the countries where British pensioners can benefit from annual benefit increases, thanks to the UK’s triple protection guarantee. However, this advantage depends on the country where one retires.
For those thinking about moving abroad, MacKenzie recommends doing plenty of research before doing so. “The Portuguese Chamber of Commerce organizes a semi-annual tour of the UK, which is very useful. Social media can also be useful, but there is a lot of misinformation circulating,” he says.
He also advises having professional help for the most complicated procedures. They, for example, continue to work with the same real estate agent who managed their holiday home when they lived in the United Kingdom, and that has been of great help to them.
“Portuguese is not an easy language, and we don’t read or speak it fluently, so having that help was beneficial. It can also be a problem if the steps are not followed correctly, for example, joining the Portuguese tax system while leaving the UK can be complicated because the tax year works differently,” explains MacKenzie.
In Portugal, the fiscal year coincides with the calendar year (from January 1 to December 31), while in the United Kingdom it runs from April 6 to April 5. Therefore, there may be a year in which you have to file the return in both countries.
“You have to be realistic about what you want to take on and where you need help.”